2013 (12) TMI 48 - AT - Service Tax

Demand of service tax - Service of club and association - Maintenance facility provided at Thialand - Appellant did not pay any service on such payments remitted abroad - Held that - in the case of these services the liability is determined with reference to place of residence of the recipient of service rather than place of performance. In the view of the provisions in section 66A of the Finance Act, 1994 it appears that the applicant and the Branch in Dubai have to treated as different entities - Assessee directed to make a pre deposit - Partial stay granted.

Summary

Issues Involved:
1. Whether service tax is payable on payments made abroad for services received by the applicant?
2. Errors/legal issues in the demands confirmed by the Revenue.
3. Classification of services provided by the branch office.
4. Liability of the applicant for services related to management consultancy and market research agency.
5. Whether the branch office and the applicant should be treated as separate entities for tax purposes.
6. Pre-deposit requirement for admission of appeal and stay on collection of dues.

Analysis:

Issue 1:
The Revenue contended that service tax is payable on payments made abroad by the applicant for services received. The Revenue relied on section 66A of the Finance Act, 1994, to support their position. The demand was classified under Club or Association Services, leading to a confirmed amount against the applicant for a specific period.

Issue 2:
The Ld. advocate for the applicant raised several errors and legal issues in the demands confirmed by the Revenue. These included challenges related to payments made prior to a specific date based on legal precedents, discrepancies in recorded payments, demands on legal services and architect services, and activities performed outside India which were argued to be not taxable.

Issue 3:
The Ld. AR for Revenue argued that the branch office should be considered a separate entity from the main office in India. He contended that services rendered by the branch office to promote the business of the applicant should be considered taxable. The classification of services as 'Business Support Service' or 'Business Auxiliary Service' was also proposed.

Issue 4:
The Tribunal found merit in many arguments presented by the Ld. advocate for the applicant. However, they disagreed on the liability for services related to management consultancy and market research agency services. The determination of liability for these services was noted to be based on the recipient's place of residence rather than the place of performance.

Issue 5:
The Tribunal observed that the applicant and the branch in Dubai may need to be treated as distinct entities based on the provisions in section 66A of the Finance Act, 1994. The question of whether the branch provided services to the applicant in India was identified as an issue to be examined during the appeal process.

Issue 6:
In light of the overall facts and circumstances, the Tribunal directed the applicant to make a pre-deposit to admit the appeal. A specific amount was specified, and a deadline for compliance was set. The pre-deposit of the balance dues was waived for admission of the appeal, and a stay on the collection of dues during the appeal's pendency was granted.

This detailed analysis covers the various issues involved in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's considerations and directions for further proceedings.